FEASIBILITY ANALYSIS AND

CRAFTING BUSINESS PLAN

 INTRODUCTION
• Feasibility study is an assessment of the
practicality of a proposed project or system. The
feasibility of a project can be ascertained in terms
of technical factors, economic factors or both.
• Project feasibility analysis: It can be defined as
the process of viability of a project which
associated with the project such as technical,
financial, social, economic, managerial and
environmental etc.
 Various steps involved in feasibility study

• Identify and recognize the people or firms that will be

involved in preparing the various aspects of the study.
• Examine the market feasibility.
• Find out if the project or idea is technically feasible.
• Proceed with the management study.
• If management is feasible, determine if it is financially
feasible.
• If government project, assess the social desirability of
the project and it will have an economic benefits to the
people living in the community and its vicinities.
• Lastly, prepare the summary of the feasibility study.
 TYPES OF PROJECT FEASIBILITY
  Technical Feasibility Managerial Feasibility

Economic Feasibility  Financial Feasibility

Social Feasibility Schedule Feasibility 

Cultural Feasibility  Resource Feasibility 

Safety Feasibility Operational Feasibility 

Political Feasibility Marketing Feasibility 

Legal/Ethical Feasibility  Real Estate Feasibility 

Environmental Feasibility Comprehensive Feasibility 

 ROLE OF FEASIBILITY ANALYSIS IN DEVELOPING
BUSINESS IDEAS
Product/ Yes in
Service
feasibility
all four
area
Spending the Industry /
time & Market Proceed with
Proposed resource feasibility planning
necessary to
business move forward
venture Organisatio-
with the
-nal
business idea
feasibility
Drop or rethink
depends on…
business idea
No in one
Financial
or more
feasibility area
 FEASIBILITY ANALYSIS OF INDUSTRY/ MARKET

• Is an assessment of the overall appeal of the

product or service being proposed.
• For industry/market feasibility analysis, there
are three primary issues that a proposed
business should consider:
1. Industry attractiveness
2. Market timeliness
3. Identification of a niche market
1. Industry attractiveness- Industry
Attractiveness is the (relative) future profit
potential of a market.  Industries vary
considerably in terms of their growth rate. In
general, the most attractive industries are
characterized as the following:
• Are large and growing.
• Are important to the customer.
• Are fairly young rather than older and more
mature.
• Have high, rather than low, operating margins.
• Are not crowded.
2. Market timeliness – A system for rating stocks
according to earnings and price performance. A stock
being rated for timeliness is assigned a letter between
A and E, with A indicating the highest earnings and
price performance.
Type of research How it is conducted

Primary This is a research that is original and is collected by the

research entrepreneur. In assessing the attractiveness of a new
market, this typically involves an entrepreneur talking to
potential customers and key industry participants.

Secondary This is a research that probes data that are already

research collected. Examples of where this data might come from
are: industry‐ related publications, government
statistics, competitor’s Web sites, and industry reports
from research firms like Forrester Research.
3. Identification of a Niche Market- A niche
market is a place within a larger market segment
that represents a narrower group of customers
with similar interests. For a new firm, selling to a
niche market makes sense for at least two
reasons:
• It allows a firm to establish itself within an
industry without competing against major
competitors head on.
• A niche strategy allows a firm to focus on
serving a specialized market very well instead
of trying to be everything to everybody in a
broad market, which is nearly impossible for a
new entrant.
 FEASIBILITY ANALYSIS OF PRODUCT OR SERVICES

• Product/service feasibility analysis is an

assessment of the overall appeal of the
product or service being proposed.
• There are two components to product/service
feasibility analysis: product/service desirability
and product/service demand.
• Its important to take up a concept test which
involves showing a preliminary description of
the product or service idea to prospective
customers to gauge customer interest,
desirability and purchase intent.
• A well-designed concept test, which is usually
called a concept statement, includes the
following:
i. A description of the product or service being
offered.
ii. The intended market.
iii. The benefits of the product or service.
iv. A description of how the Product/service
feasibility analysis is an assessment of the
overall appeal of the product or service
being proposed.
v. A description of how the product or service
will be sold and distributed.
FEASIBILITY ANALYSIS OF FINANCE
• A financial feasibility study is an assessment of the
financial aspects. If in case of starting and running a
business, it considers many things including start-up capital,
expenses, revenues, and investor income and
disbursements.
• Components of financial feasibility analysis:
1. Total start- up cash needed.
2. Financial performance of similar businesses.
3. Overall attractiveness of a proposed venture.
4. Financial management(Objectives and Process).
5. Getting financing.
 Sources
o Personal
o Debt financing
o Equity financing
 FEASIBILITY REPORT

• A feasibility report is the results of a

feasibility study. This report details whether
or not a project should be undertaken and
the reasons for that decision.
• A Feasibility Study Report (FSR) is a formally
documented output of feasibility study that
summarizes results of the analysis and
evaluations conducted to review the
proposed solution and investigate project
alternatives for the purpose of identifying if
the project is really feasible, cost effective
and profitable.
Steps in writing a Feasibility Study Report
(FSR):
 Step 1: Write Project Description
 Step 2: Describe Possible Solutions
 Step 3: Evaluation Criteria
 Step 4: Propose the Most Feasible Solution
 Step 5: Write Conclusion
 BUSINESS PLAN

The business plan is a written document

prepared by the entrepreneur that
describes all the relevant external and
internal elements involved in starting a new
venture.
A business plan is the blueprint of the step-
by-step procedure that would be followed
to convert a business idea into a successful
business venture.
 SIGNIFICANCE OF BUSINESS PLAN
• Clarify Direction
• Future Vision
• Attract Financing
• Attract Team Members
• Manage Company
• Gain Focus
• Product/Service Description
• Marketing Plan
CONTENTS/ FORMAT OF BUSINESS PLAN
1. Executive Summary
• Company name, address and phone number
• Name, address and phone number of all key people
• Brief description of the business, its products and services
and the customer problems they solve
• Brief overview of the market for your products and
services
• Brief overview of the strategies that will make your firm a
success
• Brief description of the managerial and technical
experience of the key people
• Brief statement of the financial request and how the
money will be used
•
2. Vision and Mission Statement
• Entrepreneurs vision for the company
• “What business are we in?”
• Values and principles on which the business
stands
• What makes the business unique? What is the
source of its competitive advantage?
3. Company History (for existing businesses only)
• Company founding
• Financial and operational highlights
• Significant achievements
4. Business and Industry Profile
A. Industry analysis
• Industry background and overview
• Significant trends
• Growth rate
• Key success factors in the industry
B. Outlook for the future stages of growth (start-up,
growth, maturity)
C. Company goals and objectives
• Operational
• Financial
• Other
5. Business Strategy
A. Desired image and position in market
B. SWOT analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
C. Competitive strategy
• Cost leadership
• Differentiation
• Focus
6. Company Products and Services
A. Description
• Product or service features
• Customer benefits
• Warranties and guarantees
• Uniqueness
B. Patent or trademark protection
C. Description of production process (if applicable)
• Raw materials
• Costs
• Key suppliers
D. Future product or service offerings
7. Marketing Strategy
A. Target market
• Complete demographic profile
• Other significant customer characteristics
B. Customers motivation to buy
C. Market size and trends
• How large is the market?
• Is it growing or shrinking? How fast?
D. Advertising and Promotion
• Media used- reader, viewer, listener profiles
• Media costs
• Frequency of usage
• Plans for generating publicity
E. Pricing
• Cost structure (Fixed and Variable)
• Desired image in market
• Comparison against competitors pricing
F. Distribution strategy
• Channels of distribution used
• Sales techniques and incentives
8. Location and Layout
A. Location
• Demographic analysis of location versus target
customers profile
• Traffic count
• Lease /rental rates
• Labour needs and supply
• Wage rates
B. Layout
• Size requirements
• Layout plan
9. Competitors Analysis
A. Existing competitors
• Who are they? Create a competitive profile matrix
• Strengths
• Weaknesses
B. Potential competitors: Companies that might enter the
market
• Who are they?
• Impact on your business if they enter
10. Description on Management Team
A. Key managers and employees
• Their backgrounds
• Experience, skills and know-how they bring to the company
B. Resumes of key managers and employees
11. Plan of Operation
• Form of ownership chosen and reasoning
• Company structure (organisation chart)
• Decision- making authority
• Compensation and benefits packages
12. Financial Forecasts
A. Financial statements
• Income statement
• Balance sheet
• Cash flow statement
B. Break- even analysis
C. Ratio analysis with comparison to industry standards
(most applicable to existing businesses)
13. Loans or Investment Proposal
• Amount requested
• Purpose and uses of funds
• Repayment or “cash-out” schedule (exit
strategy)
• Timetable for implementing plan and
launching the business
14. Appendices: Catalogues, sales brochures,
public relations material, customer lists,
transacting banks, terms of loan, market
research data, reference letters etc.
COMMON ERRORS IN BUSINESS PLAN FORMULATION
 The plan is poorly written
 The plan is incomplete
 The plan is too vague
 The plan is too detailed
 The plan makes unfounded or unrealistic assumptions
 The plan includes inadequate research
 You claim there's no risk involved in your new
venture
 You claim you have no competition
 Unrealistic Financial Projections
 Not Defining the Target Audience